Lawsuit: Drug protocols cost taxpayers millions

Investigator fired after going public on J&J's anti-psychotic drug campaign

Nov. 22, 2011

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Risperdal, a product of J& J subsidiary Janssen.

Johnson & Johnson’s marketing strategies for Risperdal, according to court documents and lawsuits:

Middlemen. Received what the U.S. Justice Department called kickbacks to sell hundreds of millions of J&J’s drug to a national company that manages nursing home pharmacies to prescribe to its patients. Medical journey studies. At least one doctor in a study touting the benefits of Risperdal in a medical journal was paid $61,000 by J&J for speaking engagements. Computer programs. J&J, along with its competitors, helped fund a joint venture that recommended their drugs to state doctors over less expensive, generic drugs. In all three cases, Johnson & Johnson said it has done nothing unlawful and is fighting the lawsuit claims in court. Source: Court documents from U.S. v. Johnson & Johnson and Texas v. Janssen Pharmaceutica Inc. and Johnson & Johnson.

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Allen Jones was curious.

Why did Pennsylvania use a computer program that often pointed to a Johnson & Johnson drug over other, cheaper medicine to treat certain mental illnesses, the investigator for the Keystone State’s Office of Inspector General wanted to know.

While the computer program mandated doctors use a new line of anti-psychotic drugs, including Risperdal, sold by J&J’s subsidiary Janssen companies, Jones said he couldn’t find government-funded medical studies showing that these new drugs were any more effective than their generic predecessors.

Jones’ 2002 inquiry into the drug added to a chain of events that ultimately led Texas to sue New Jersey-based health care giant Johnson & Johnson on claims it orchestrated a multimillion-dollar violation of the Texas Medicaid Fraud Prevention Act.

Jones said in an interview that it was his belief that the company “substituted opinion for science.”

Johnson & Johnson’s sales strategy turned Risperdal, a drug approved by the FDA to treat only schizophrenia and bipolar disease, into a blockbuster that the company sold for those illnesses and, unlawfully, many more, according to the Texas lawsuit.

Risperdal cost substantially more than older, generic drugs and generated more than $25 billion for the company before its patent expired in 2007, according to court records. But the drug often was no more effective at treating mental disorders than older drugs, the National Institute of Mental Health found. Because Medicare and Medicaid paid many of the bills, it cost taxpayers millions, according to federal and state lawsuits.

Twelve states, including Pennsylvania and Texas, have sued Janssen to recover some of the money they spent on Risperdal. South Carolina and Louisiana each were awarded more than $250 million last year. The case brought by Pennsylvania, where Jones first made his discovery, was dismissed in June 2010 after a state judge ruled prosecutors didn’t provide enough evidence. West Virginia lost its case on appeal. The cases in Louisiana and Pennsylvania have been appealed. The company said it intends to appeal the case in South Carolina. Texas and the seven remaining cases are awaiting trial.

The U.S. Justice Department also is investigating the marketing of Risperdal. J&J said in an August filing with the U.S. Securities and Exchange Commission that it is negotiating a settlement and has agreed, “in principal,” to plead guilty to a misdemeanor for violating the Food, Drug and Cosmetic Act. No plea has been made yet.

New Jersey hasn’t filed a lawsuit. It isn’t clear how much the state spent on Risperdal in the last 10 years. New Jersey’s Division of Medical Assistance and Health Services refused to provide the information unless the Asbury Park Press paid a $5,071 processing fee. The Press declined to pay the fee.

The Risperdal legal dispute is an example of a problem that is endemic in the pharmaceutical industry, some doctors say. Government-funded studies about the drug’s effectiveness weren’t published until more than a decade after the drug was first approved.

In the case of Risperdal, “we’re spending money on a drug that isn’t superior and might be inferior to other drugs that cost a fraction as much,” said Dr. John David Abramson, a health care policy expert at Harvard University and author of “Overdosed America,” who investigated the drug for Louisiana’s lawsuit.

“It ought to make honest citizens … want to throw up to see that this money is being extracted from society for no gain, when our country is headed toward financial ruin,” Abramson said.

Whistle-blower fired

Allen Jones, the Pennsylvania investigator, was fired in 2004 after going public with his claims, but he continued to investigate, eventually becoming a plaintiff and whistle-blower in a Texas state lawsuit against Janssen. That trial is scheduled to start Jan. 9.

Risperdal was approved by the FDA in 1993 to treat patients with schizophrenia and, a decade later, patients with bipolar disorder. Janssen, on its website, also says the drug can help treat some symptoms of autism in children and adolescents.

With it came the chance for Janssen to replace Haldol, an anti-psychotic drug that Belgian scientist Paul Janssen himself helped develop in the 1950s, just before Johnson & Johnson bought his company in 1961.

Older anti-psychotic drugs had been available in generic form for decades. Risperdal and a new generation of anti-psychotics came to market in the 1990s at a cost that far exceeded the older drugs, according to the Texas lawsuit.

J&J said Risperdal not only would be safer and more effective than the first generation of anti-psychotic drugs, but also could treat mental disorders other than schizophrenia and bipolar disorder, according to the Texas lawsuit.

Janssen’s medical studies weren’t conclusive enough for the FDA to claim Risperdal was more effective than either Haldol and its generic versions or the new anti-psychotic medicine on the market, the Texas lawsuit said.

Unable to tout Risperdal’s superiority, Janssen got the message to doctors anyway, according to legal documents and interviews. The methods included:

Middlemen. Johnson & Johnson teamed with Omnicare, the nation’s largest pharmacy manager for long-term care facilities, to ensure Omnicare’s pharmacists would recommend Johnson & Johnson’s drugs, according to a lawsuit against J&J filed in Massachusetts in 2010 by the U.S. Justice Department.

Omnicare cared for 1.4 million clients in 47 states. Its annual purchases of Johnson & Johnson drugs climbed from $100 million in 1999 to $280 million in 2004. And its purchases of Risperdal alone exceeded $100 million a year, according to the lawsuit.

The lawsuit claims J&J paid Omnicare tens of millions of dollars in grants, rebates, sponsorships and educational funding — payments that the federal government considered kickbacks.

A substantial portion of the prescriptions were paid by taxpayers through Medicaid, the government said. (Omnicare in 2009 agreed to pay $98 million and settle separate charges by the U.S. that it took kickbacks from J&J. The company didn’t admit wrongdoing).

J&J attorneys in court papers said the payments to Omnicare were lawful. The U.S. government’s Massachusetts case against J&J hasn’t gone to trial yet.

Medical journal studies. A 2002 New England Journal of Medicine study found adults with schizophrenia had a lower risk of relapse on Risperdal than on Haldol. The lead author was a doctor who was paid at least $61,000 between 2000 and 2003 to speak on behalf of Johnson & Johnson, and another author was a Janssen vice president, according to a report by David J. Rothman, a Columbia University medical school professor who researched the issue for the Texas attorney general’s office.

A year later, a study in the Journal of Clinical Psychiatry found Risperdal significantly improved treatment for aggression, agitation and psychosis for patients with dementia. Rothman found company employees edited the text and downplayed side-effects, such as stroke.

The Texas lawsuit said the company used “scientifically-insignificant” studies and ghostwritten publications to “disseminate misrepresentations” about the drug’s safety, superiority, appropriate use, efficacy and cost effectiveness.

Computer programs. J&J and other drug companies in 1996 helped fund the Texas Medical Algorithm Project, a computer program that doctors treating patients in public facilities tapped into to decide which drugs to prescribe for schizophrenia. Risperdal and the other new — and more expensive — anti-psychotics were positioned to come up as the first choice for treatment. And clinicians couldn’t stray from the algorithm without written justification, according to the Texas suit.

J&J paid at least $30,000 in fees and honorariums to Steven Shon, medical director of the Texas mental health department, to speak on its behalf. He traveled to a dozen states, including Pennsylvania, and encouraged them to adopt similar algorithms. And his department sent a memo to public health facilities that showed Risperdal was less expensive than two other new anti-psychotic drugs, Rothman said.

“If costs were so important, surely Shon should have discussed the possibility that for some patients, the first generation drugs would have been effective,” Rothman wrote.

Shon retired five years ago. He said in an interview that the algorithm project consolidated a massive amount of scientific journal research into one, easy-to-use computer program.

“I brought in experts from all over,” he said. “They would review the literature and put the algorithm together. I was the administrator of the project, but I had nothing to do with what medications were in there.”

He said he was paid to consult drug companies, including Janssen, but not on issues related to his state job because it would have been a conflict of interest. He said he traveled to speak about the algorithm, but only when other states invited him. And he said he never advocated for Risperdal in particular.

New Jersey doesn’t use a similar algorithm for the mental health patients that it treats, said Ellen Lovejoy, a state Department of Human Services spokeswoman.

One New Jersey psychiatrist said algorithms come with inherent problems. They don’t, for example, take into account patients’ individual medical histories.

“The best way I describe it is absolute malpractice because you can’t get enough (information) in the algorithm for it to be safe and effective for the patient,” said Robert Bransfield, a Red Bank psychiatrist and president of the New Jersey Psychiatric Association.

Neither Johnson & Johnson nor its attorney in Texas would comment on the Risperdal lawsuit for this story, but the company is fighting the allegations in court. In a letter sent to the Asbury Park Press on Sunday, William Weldon, J&J’s chairman and chief executive officer, said the company remains as committed to its credo — a mission statement written in 1943 that makes its consumers its first responsibility — as the company’s previous generations.

“We don’t claim to be perfect and we own our mistakes,” Weldon wrote. “We would never put anything ahead of patient health and safety.”

Emails between Janssen executives suggest there was an internal struggle about how to promote its drug and stay within the FDA’s boundaries.

On Sept. 11, 2003, the FDA required Janssen to include a warning on its labels saying patients using Risperdal ran the risk of developing high blood sugar and diabetes. Janssen added the information. The FDA approved it and asked Janssen to alert doctors.

The letter to doctors, signed by Ramy Mahmoud, a Janssen vice president, and dated Nov. 10, 2003, read in part that some evidence showed Rispderal had a lower risk of diabetes than its competitors.

Scott Reines, a J&J vice president, saw the letter two weeks later. To him, it was a comparative claim that the FDA specifically prohibited. “Do you think that’s sufficient?” he emailed a colleague. “I’m troubled by the liberties they’ve taken. To me, it seems like off-label promotion of differences among the (new anti-psychotic drugs.)”

He wrote in the margin: “Spinning. No competent person would have sent this out.”

The FDA wasn’t satisfied, either. On April 19, 2004, it warned Janssen that it misleadingly claimed Risperdal was safer than its competitors and violated the Food, Drug, and Cosmetic Act. Janssen sent a letter in July 2004 that met the FDA’s standards.

Government agencies took notice of Risperdal. South Carolina, for example, sued the company in 2007 to recover Medicaid money it spent on the drug. A jury ruled in its favor. And a judge last June ordered the company to pay the state $327 million.

“I could not agree more with the Janssen executive, Scott Reines, who characterized the Dear Doctor Letter in an unfavorable light and railed against those in the Company who wrote, approved and distributed the Letter,” Judge Roger Couch wrote. Johnson & Johnson said it plans to appeal the judgment.

Reines retired in 2008. In an interview, he said the company, after its battle with the FDA, restructured its review process and added more people to sign off on communications before they were sent to doctors.

“In all the emails I sent, and a bunch of them came out in the trial, I never said — because I don’t believe — that the company was actually miscommunicating the information,” Reines said. “I think the company … made a mistake in the way they interpreted the regulations. And when I made that rather flamboyant comment about ‘no competent person,’ that had to do with the fact that I was surprised that they had misread what was allowed under the regulations.”

Government-funded research published more than a decade after Risperdal was on the market concluded that it and other new anti-psychotic drugs were no more effective than their predecessors.

Since as much as 85 percent of patients who used Risperdal paid for their treatment from public-sector payors, taxpayers in Texas, at least, would have saved millions if patients had received the less expensive, but at least as equally effective, generic drugs, the Texas lawsuit said.

Abramson is among several doctors interviewed calling for more research that isn’t influenced by the drug companies themselves. One new commission, created as part of President Barack Obama’s health care reform act, has $26 million to fund independent clinical research.

But three of the 21 board members that decide which research will receive grants work in the health care industry, including Johnson & Johnson’s chief science and technology officer in medical devices and diagnostics.

“I find it totally shocking that our one effort at health reform in our lifetime doesn’t provide for completely independent assessment of the knowledge that doctors have access to,” Abramson said.